Billionaire Investor Stanley Druckenmiller's AI Stock Shuffle: Exits Nvidia and Microsoft, Bets on Amazon

Billionaire Investor Stanley Druckenmiller Just Sold Broadcom and Microsoft and Piled Into These "Magnificent Seven" Stocks Instead | The Motley Fool

Very few investors can claim to be in the same league as Warren Buffett, arguably the greatest investor ever. But billionaire Stanley Druckenmiller is one of them. Druckenmiller worked as a fund manager for George Soros, another legendary investor, and he's never posted a year in the red, while putting up impressive returns over decades of investing. Today, Druckenmiller still invests through his own fund, the Duquesne Family Office. All funds with at least $100 million in assets under management must file 13F forms within 45 days of the end of each calendar quarter, which recently occurred for the fourth quarter of 2024 on Feb. 14. The 13F discloses what stocks funds held at the end of each quarter. In the fourth quarter, Duquesne revealed that it exited its positions in Broadcom (AVGO -0.87%) and Microsoft (MSFT 0.53%) and piled into these three "Magnificent Seven" stocks instead. According to Duquesne's 13F, the fund sold its nearly 240,000 shares of Broadcom and its nearly 43,100 shares of Microsoft. Broadcom had a superb year in 2024, with its stock rising nearly 108%, while Microsoft underperformed the broader market, only posting a 12% gain. Druckenmiller has been in and out of Broadcom since 2023. He purchased a new stake in the company in the third quarter of 2023 and then sold in the following quarter. He repeated this trend in the third and fourth quarters of 2024. Druckenmiller looks to have done OK on his trades with Broadcom, selling for higher average prices than he bought the stock for with gains in the 9% to 16% range based on his average purchase and sale prices. Broadcom has captivated the market with its ability to make custom chips for companies that can be used to carry out specific artificial intelligence (AI) strategies. For instance, one of Broadcom's clients is Meta Platforms. The two teamed up to build the Meta Training and Inference Accelerator chip. Meta plans to pour hundreds of billions of dollars into AI technology. Many analysts and investors also think Broadcom has secured a relationship with OpenAI. Druckenmiller has been investing in and trading Microsoft for over a decade and has made 41 transactions with the stock since 2014. He once again took a new stake in Microsoft in early 2023 and increased his stake for several consecutive quarters. However, Druckenmiller began selling the position in the second quarter of 2024 and exited the position in the fourth quarter. Microsoft, a member of the Magnificent Seven, failed to take advantage of the AI trade in 2024, as investors questioned the company's AI strategy and ability to make money off of AI. The company has also had some trouble over the last year hitting its guidance. However, it's not unusual for Duquesne to be in and out of stocks. Druckenmiller likes tech and AI but is also vigilant on valuations and will sell any stock if he thinks it's too expensive. Despite selling Microsoft and Broadcom, Druckenmiller scooped up shares in other big tech and AI stocks in the fourth quarter including: Now, the 13F filing shows that Druckenmiller purchased these stocks in the fourth quarter but it doesn't say exactly when. If he purchased them prior to President Donald Trump's election victory on Nov. 5, he's likely done quite well. I think there is a good chance that Druckenmiller did get the timing right because he said publicly a few weeks before the election that the market had been pricing in a Trump victory. Given where valuations trade and the stock's recent rally, I could see Druckenmiller potentially selling Tesla during this quarter. Amazon and Google make a lot more sense for Druckenmiller because these stocks that are not solely reliant on AI. Amazon makes a lot of revenue from its software business and retail and subscription sales, while many analysts believe Google has attractive AI assets that the company can unlock value from. Google's stock has also struggled due to the U.S. Department of Justice's lawsuit against the company, which many believe will eventually blow over.

Billionaire Stanley Druckenmiller Dumped all of His Nvidia Shares Last Year and Just Bought Shares of This Top AI Player | The Motley Fool

Once every quarter, we -- and I mean investors of every portfolio size, from a few dollars on up to millions or billions -- get a great opportunity. We're able to see the latest moves of some of the most successful investors, those who have built and maintained billion-dollar portfolios. Managers of $100 million or more in the U.S. must report their latest trades on form 13F to the Securities and Exchange Commission -- and these forms are available for all of us to examine. Of course, copying every move of every billionaire investor is impossible. But by studying some of their moves, we may gain valuable investing ideas -- and ones that could boost us along the path to wealth. One particular billionaire to watch is Stanley Druckenmiller, the investor who led Duquesne Capital Management to an average annual return of 30% without any money-losing year over a period of 30 years. Druckenmiller has since closed the fund but invests through the Duquesne Family Office -- and here he recently made a big move. Druckenmiller last year dumped all of his Nvidia (NVDA 0.63%) shares, and in the fourth quarter, opened a position in another top artificial intelligence (AI) stock. Let's find out more. First, a look at Druckenmiller's Nvidia move. The leading AI chip designer represented the billionaire's top holding back in 2023, but last year he began reducing his position and completely closed it out in the third quarter. As Druckenmiller has said, this wasn't due to a loss of faith in the company, but more as a move to lock in profits. Nvidia stock had soared 1,700% over the past five years thanks to demand for its AI chips and other related products and services. Quarter after quarter, this market leader reported double- or triple-digit revenue growth, with revenue reaching record levels well into the billions of dollars. For example, Nvidia generated more than $35 billion in revenue in the most recent quarter, and that's at a high level of profitability on sales -- with gross margin surpassing 70%. But Nvidia's valuation climbed, reaching beyond 50x forward earnings estimates last year. Druckenmiller actually said in an interview with Bloomberg that his decision to close the Nvidia position was a mistake and he would consider picking up the shares again in the future at the right valuation. Now, let's consider Druckenmiller's move in the fourth quarter of last year. He didn't pick up shares of Nvidia again -- but he opened a position in a company that's also bringing in billions of dollars thanks to AI. And this company is Amazon (AMZN -1.65%), a leader in both e-commerce and cloud computing. Druckenmiller bought 328,400 shares, representing a value of $72,048,000 and more than 1.9% of his portfolio. This positions Amazon as one of Druckenmiller's top five buys during the quarter. So, how does this company fit into the AI space? Amazon benefits from AI in two ways. It uses the technology to gain in efficiency across its e-commerce business -- for example, AI tools help streamline operations across its fulfillment centers. And Amazon Web Services (AWS) -- the cloud business -- sells AI products and services to customers. Here, through AWS, Amazon already is scoring a major AI win. The business is present across every layer of a customer's potential AI needs -- AWS offers the basics for the training of models, such as chips, and it also offers a fully managed service that allows companies to tailor models to their needs. On top of this, AWS develops AI-driven apps to immediately apply AI to complete tasks and solve problems. All of this has helped the cloud business reach a $115 billion annualized revenue run rate. So Amazon already is winning in the AI business. And this is likely to continue as we're still in the early stages of AI development -- today's $200 billion market is forecast to reach beyond $1 trillion by the end of the decade. So, Druckenmiller may regret his sale of Nvidia, but his move to get in on Amazon at this point could lead to more major AI-gains for his portfolio -- and for the portfolio of any investor who buys this AI stock now and holds on for the long term.